PERS: An unnecessary predicament
by Marty Wiseman
Published: September 25,2011
The growing tempest enveloping the Public Employees Retirement System of Mississippi (PERS) did not have to happen.
That is not to say that its current status as being 65 percent funded should not be given some attention. Nevertheless, as has been pointed out a number of times, the Mississippi system is in relatively good health, but prudence would call for some adjustments that, over time, would rectify any current shortcomings. So, what is the problem that has the telephone lines, internet sites, and e-mail networks all abuzz?
One might speculate that the Mississippi version of a defined benefit pension plan, like similar systems in other states, finds itself in the midst of a perfect storm. The current sour economy certainly has a role to play. Pension funds depend significantly on investments in order to grow toward targets necessary to sustain the payment of their agreed upon benefits. Anytime the stock market and related investment venues perform erratically pension fund mangers get sweaty palms. Workforce and population demographics also have an impact. Retiring baby boomers are drawing, or preparing to draw, benefits from the system, and every indication is that they will live longer than the previous generation of retirees. Currently, because of budget cuts there are fewer new hires available to pay into the system. However, these factors are fairly normal and are part of the cyclical nature of managing such a system. From time to time adjustments in such things as contributions and mandatory lengths of careers for full retirement are necessary to maintain expected benefit levels. However, these factors cannot totally explain the current angst being felt and increasingly being acted upon by public sector retirees and employees who have been paying into the system.
Their fears are being stoked by several years of increasingly vocal disdain for government in general and, more often lately, personal animosity toward those who have chosen careers in public service. There was a time when it was considered a noble endeavor to sacrifice a portion of ones earning power in order to perform work in the public sector that would benefit numbers of citizens whom the public employee would likely never meet. Very few public employees need much convincing that those days have changed. Americans for Tax Reform President Grover Norquist’s pledge to work to “shrink government until we can drown it in the bathtub” is a familiar phrase to all now. Others of that persuasion have encouraged citizens to become “enraged” enough about government to maintain vigilance in eliminating it. In the midst of this atmosphere the specter of the face-to-face confrontations with public employees in Wisconsin, Ohio, Indiana and other states as well as drastic cuts in retirement systems in states like New Jersey is not lost on Mississippi’s public employees. Rightly or wrongly, the impression has taken root among many of Mississippi’s public servants that they, like employees in other states, are being targeted in ways that would inflict financial pain because of their choice of occupation.
Perhaps there are some misunderstandings on the part of the taxpaying public that can be corrected. Mississippi is the poorest state in the union by any number of measures. Thus, basic services that cannot be afforded by potential recipients can only be met by the public sector. The list is fairly long. Public health and mental health services are in tremendous demand. Public safety and transportation are hardly expendable. More and more pressure for higher quality education from kindergarten through high school and on to community colleges and universities is being applied every day.
Plenty of data exist to show that all of these public sector job categories pay lower salaries than their private sector counterparts. Furthermore, research reveals that a significantly higher proportion of public sector employees were required to have college degrees and advanced degrees than is the case for those in the private sector.
Certainly in Mississippi the Public Employees Retirement System has been an incentive to attract and keep school teachers, university and community college faculty, policemen, fire fighters, specialists in all health- related fields, engineers and others highly skilled in technical fields when many could have and would have crossed state lines or gone to the private sector. It should be noted that at 9 percent the salary contribution of a Mississippi public employee is one of the highest in the country.
What is it then that Mississippi’s retirees and public employees fear from the work of the current governor’s commission? Based on the continuing cacophony of anti-government rhetoric they fear that the need to fine tune the retirement system will be used as a pre-text to exact a measure of revenge against “the faceless government bureaucrats” for their choices of careers. Mississippi can ill afford to lose the best of her public servants.
Commission chair and Gulfport Mayor George Schloegel, in an effort to be reassuring, was hardly comforting when he told a recent public hearing that the commission’s report and recommendations would be withheld until after the November election so as to avoid a political verdict on the report. Hopefully, public employee fears will prove to be unfounded and the commission will discover ways to shore up the Public Employees Retirement System without cutting the benefits that public employees have long accepted as promised to them.
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